The government previously predicted the decrease in GDP at 0.8%. Inflation in 2015 is now forecast to stand at 12%, up from the previous estimate of 7.5%, Alexei Ulyukayev said, Russian news agencies reported.

The announcement comes a day after the Russian central bank unexpectedly lowered its key interest rate by two percentage points, sending the ruble lower. Russia was also recently downgraded to “junk” level, below investment-grade, by the credit rating company Standard & Poor’s amid the mounting violence in eastern Ukraine.